Stet: China

Just as the tiny gambling Mecca of Macau is being rocked by a sensational corruption trial, one Clare native is hoping to weave his magic on the former Portuguese colony off the coast of mainland China.

After a decade working with the luxury Peninsula hotel group, Ian Coughlan has taken the 45-minute boat trip from Hong Kong to take on a new challenge at the Wynn Resorts’ operation in the Chinese special administrative region (SAR).

And Coughlan could have hit a personal jackpot.

While he initially moved to Macau back in January to work as director of hotel operations with Wynn, he has been recently promoted to president of the gleaming, gold-fronted 20-storey resort, which boasts 600 rooms and a 100,000 square feet casino.

A tasty remuneration package has been negotiated for 48-year-old Coughlan, who was born and raised in Ireland, but has spent most of his adult life abroad, working in hotels in Switzerland, London, Atlanta, Hawaii and Asia.

An SEC filing last week by Wynn Resorts reveals that Coughlan, whose initial contract runs five years, will be paid a base annual salary of $750,000 (€511,000), with the prospect of earning a bonus of a further $750,000 this year alone should targets be met. And that’s not all.

Married to Pamela, and with two young children – Kyle and Emmet – Coughlan has also negotiated three return business class flights a year for his family, to either Singapore or Ireland. Four return business class flights with Cathay Pacific from Hong Kong to London next March to make it home in time for St Patrick’s Day will cost almost €14,000 (HK$159,412).

Meanwhile, Coughlan and his family receive gratis accommodation while in Macau “at a level commensurate with [the] employee’s position”. He’ll also get a “luxury automobile” and will always travel first-class on business. And don't forget the health plan and paid membership to clubs, societies and professional associations.

Not a bad deal.

But just as Coughlan is settling into his new role, the Macau casino industry has stumbled under an unwelcome spotlight.

The Wynn Macau resort – whose Las Vegas-based quoted parent has a market capitalisation of $15bn (€10.2bn) – is one of a number of new casinos jostling for a cut of the island’s massive $7.2bn gambling income. Last year the SAR overtook Las Vegas as the world’s largest gaming centre.

Wynn Resorts, which is headed by Steve Wynn, has earmarked a total of $1.2bn for its Macau hotel, which opened in 2006. A portion of that fund is being used to develop a new extension. Among those that stumped up when debt raised to fund the initial construction was syndicated, was AIB.

Wynn is just one of the companies riding a wave of investment in the former colony, which generates almost all its tax income from the gambling sector.

The floodgates opened in 2002, when Macau liberalised its gaming market and broke now 85-year-old Stanley Ho’s monopoly.

That year there were 11 casinos with 339 gaming tables and 808 slot machines. Now there are 25 casinos, 2,970 gaming tables and 7,349 slot machines. All this on a 28-square-kilometre area with a population of roughly 500,000.

And gambling-mad Asians are flocking to it.

According to Steve Wynn, the company’s Macau resort reported a staggering $900m in chip sales within 13 days of opening its doors in September last year.

In the three months to the end of September 2007, it recorded revenue of $347.6m, and in the nine-month period to the end of September, sales topped $1bn.

Adjusted Property EBITDA (earnings before interest, taxes, depreciation, amortisation, pre-opening costs, property charges and other, corporate expenses) at the Macau resort totalled $92.8m in the three months to the end of September 2007 (only slightly less than the Las Vegas casino), and $264.5m in the nine-months to the end of September.

Wynn’s emergence in the SAR has also forced US competitor Sands to up the ante. Earlier this year it said that its operating costs in Macau had climbed because it had to raise wages there to compete with the Wynn resort.

The Sands’ Macau president might well be looking enviously at Coughlan’s lucrative deal.

While Macau’s gambling industry has traditionally been the focus of a constant turf war between triad gangs (even Stanley Ho’s underworld connections have been the subject of extensive speculation and investigation), it’s corruption that is now blighting the landscape.

Last week the trial commenced of Ao Man-Long, the former secretary for transport and public works in Macau.

He’s accused of taking bribes, of money laundering and abuse of power that saw him amass a fortune of more than $100m in just six years – 57-times his family’s income during the period. He’s alleged to have helped developers win tenders for a number of projects in Macau, including the Venetian hotel and casino, owned by Sands.

The courtroom drama has rocked Macau, led to protests and even delayed the construction of one major new casino by Australian businessman James Packer – son of Kerry ‘Packer-Whacker’ Packer.

The Wynn group is also trying to snap up land to expand its Macau operations. Apart from extending its existing resort, it reported recently that it has submitted an application to the local government to obtain a concession to use an additional 52-acres in Macau’s Cotai district.

Coughlan is going to have plenty to keep him occupied. At least he can escape back to Ireland in luxury when things get rough.

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